Practitioners with their own tax debt given weeks to fix it

Practitioners with outstanding tax obligations have a small window to smooth the way forward. The Tax Practitioners Board (TPB) has initiated a compliance project targeting tax practitioners — basically calling on its own members to settle all outstanding debt and lodgment obligations.

The focus of the TPB strategy is on registered tax and BAS agents and tax (financial) advisers who have not met their own personal tax obligations. Such tax practitioners have until the beginning of February 2019, with the period until then not to be viewed as an amnesty, but rather a timeframe where agents who have made genuine efforts to remedy their affairs will be looked at more favourably by the TPB.

The TPB says that newly available data shows that about 5% of tax practitioners have outstanding or late lodgments, including activity statements and returns with the ATO. It says about 5,000 practitioners have a tax debt of more than $300, representing a total debt of nearly $115 million, with no active payment arrangements.

There are also more than 2,700 tax practitioners who are also trustees of their own SMSF with outstanding SMSF annual returns.

While the TPB says most tax practitioners do the right thing, a small but significant percentage of practitioners have been found to be also involved in other high-risk tax behaviour. This includes:

overclaimed work-related expense deductions

aggressive tax planning schemes involving avoidance

offshore tax evasion

phoenixing in the black economy

multinational profit shifting.

“The TPB will initially work closely with practitioners to give them an opportunity to remedy any outstanding tax obligations,” the Chair of the TPB Ian Taylor said in the first week of December. “After six weeks, firmer action will be taken to enforce the laws, including investigations, prosecutions and proactive collection action where appropriate.”

This can include penalties, but also loss of registration and professional designation.

In mid-2019 the TPB will evaluate the project to ensure it is working effectively and will then share key results with stakeholders and the community. Based on this evaluation of the tax practitioner debt and lodgment project, the TPB will design the next phase of the strategy, including closer scrutiny of practitioner’s own tax returns.

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